Saturday, February 24, 2018

Cash Flow Considerations – Time Lag Between Payment and Reimbursement

Let me be clear – this post may not be relevant to you. If your healthcare provider sends itemized invoices directly to Liberty after appointments/procedures, and then you are reimbursed, you will not experience this issue. However, if your healthcare provider views you as a self-pay customer, and you need to pay before appointments, this is a relevant consideration for you.

As we documented in our prior post, our healthcare provider requires us to arrange for payment prior to scheduling an appointment. What that means in practice is that we’ve fully paid for an appointment in late February that we won’t have until early April. If we use this example, here’s what a likely pay cycle will look like:

February 23 – Payment is made (money out of our pocket)

April 3 – Date of appointment (roughly 40 days later)

April 10 – Let’s assume it takes at least a week to receive the itemized bill because my gut feeling is it’s not something they’ll provide at the appointment 

April 11 – Submission of itemized bill to Liberty

May 25 – Let’s assume it takes approximately 45 days to receive payment once submitted to Liberty

In this particular example, it would be approximately 3 months from the time we paid until the time we were reimbursed. This is an important consideration for individuals or families that may not have the free cash flow to front these types of payments before receiving reimbursement. With traditional insurance, if it’s being reimbursed, the health care provider will work with the insurer directly before you see an invoice. 

We are in the fortunate position that we are able to cover this lag from payment to reimbursement. However, if we needed to arrange for a significant procedure up front, before being reimbursed, that would be much more challenging. In that case, I think we would connect Liberty with the Clinic to work something out beforehand.

There’s some silver lining here: At least Liberty’s structure provides for full reimbursement on wellness visits as well as on any expenses over the $1,500 annual unshared amount. Even if we have to wait a while, we’ll at least get reimbursed. Nonetheless, we just wanted to share this as something to think about as you prepare financially for the making the switch.